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HB 2712

UTILITIES-WATER ACQUISITION

104th Regular Session Introduced by Nabeela Syed

The bill limits rate-base recovery for large investor-owned water/sewer acquisitions to 20% of the lesser of purchase price or fair market value, with the rest borne by shareholder

Rule 19(a) / Re-referred to Rules Committee
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Bill Summary · HB 2712

HB 2712 — Utilities — Water and Sewer Utility Acquisition (summary)

Note: The provided document contains text from two different bills both labeled “HB 2712.” This summary focuses on the utilities/water-acquisition bill (Illinois LRB text amending 220 ILCS 5/9‑210.5), which matches the title “UTILITIES‑WATER ACQUISITION.” The other text (Arizona §13‑3551) appears unrelated (obscenity definitions).

Main purpose

To change how investor‑owned “large public utilities” (water/sewer companies serving >15,000 connections) value and incorporate acquired water or sewer utilities into their rate base, to shift some acquisition costs to shareholders rather than ratepayers, and to require a local referendum approving an acquisition before the Illinois Commerce Commission (ICC) may approve it.

Key provisions

  • Rate‑base treatment

    • Instead of adding the full lesser of (purchase price or fair market value) to the acquiring utility’s rate base, only 20% of the lesser of (purchase price or fair market value) will be included as the rate base attributable to the acquired water/sewer utility.
    • The remaining difference between the rate base amount and the purchase price (or fair market value) is required to be borne by the shareholders of the acquiring large public utility (i.e., not recovered from customers via rates).
    • Any adjustments needed to ensure the rate base reflects “prudent and useful investments” are subject to ICC determination.

  • Fair‑market valuation process (existing provisions retained/clarified)

    • If the acquiring utility elects this procedure, three appraisals must be performed and averaged to establish fair market value.
    • Appraisers must be disinterested, state‑certified general real estate appraisers, follow the Uniform Standards of Professional Appraisal Practice (USPAP), and use a licensed Illinois engineer to assess tangible assets (cost approach).
    • Appraisers request lists of previously disallowed investments to exclude from future rate base calculations.

  • Local referendum requirement (new)

    • Following required public meetings/notice, a referendum must be placed on the ballot at the next election for all electors within the area served by the water/sewer utility being acquired.
    • Acquisition may proceed only if a majority of electors voting on the referendum within the service area vote in favor. If the referendum fails, the ICC shall not approve the acquisition.

  • Scope/definitions

    • “Large public utility” is an investor‑owned, ICC‑regulated utility regularly providing water or sewer service to more than 15,000 customer connections.
    • “Water or sewer utility” covers smaller public utilities (regularly serving 6,000 or fewer connections), water/sewer districts, municipal systems, and similar entities.

  • Sunset note in the statute: the section is listed as scheduled for repeal on June 1, 2028 (per existing text).

Who is affected

  • Large investor‑owned utilities pursuing acquisitions (>15,000 connections)
  • Small water/sewer utilities and districts targeted for acquisition (≤6,000 connections or district systems)
  • Local residents/electors within the service area (gain referendum approval power)
  • ICC (administration of valuation, appraiser oversight, approval)
  • Ratepayers/customers (likely protected from bearing full acquisition costs)
  • Shareholders of acquiring utilities (will bear difference beyond the 20% rate‑base inclusion)

Potential impact / implications

  • Limits the portion of acquisition cost recoverable from ratepayers to 20% of the lesser of purchase price or appraised fair market value, likely reducing customer bill impacts from acquisitions.
  • Increases financial risk to acquiring utilities and their shareholders, possibly affecting acquisition pricing or willingness to acquire smaller systems.
  • Introduces local direct democratic check (referendum) that can block acquisitions—even if ICC staff/supporting proceedings would otherwise approve—potentially slowing or preventing some consolidations.
  • Reinforces appraisal rigor and exclusion of previously disallowed investments from future rate recovery.

Procedural/timeline notes

  • The provision requires the referendum to be held at the next election after public meeting/notice requirements are completed.
  • Valuation and rate‑base treatment take effect through ICC proceedings and will factor into the acquiring utility’s next general rate case when the acquired utility’s cost of service is considered.
  • The statute provision is part of a section scheduled for repeal on June 1, 2028 (per the bill text).

Compiled from official sources — confirm details with the bill’s official record.

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